One potentially confusing issue in condominium associations is who insures what. In the past, most condominium association policies would cover whatever the association owned. Other association policies extended coverage into the units – for example, the sheetrock walls and ceiling, the plumbing, and the electrical within each individual unit. Association policies would often be written broad enough to cover the floor, kitchen cabinets, appliances, and carpeting.
In recent years, with the rising cost of insurance claims and the ambiguous language in some association CC&R’s, insurance coverage has changed dramatically. Many condominium documents specifically detail what is to be covered – – for example: roof repair and replacement only. In this instance, the documents are explicitly pointing out that all other structure is not covered.
A Master Package Policy will generally include property coverage that can be categorized by:
Bare walls – coverage for the common elements, usually excludes property within the unit such as interior walls, permanently installed appliances, fixtures, finishings, floors and ceilings
Single entity – coverage for the common elements, usually includes initially installed property in accordance with the association’s original plans and specifications
All in – coverage for the common elements, plus initially installed property, plus improvements and betterments made at the expense of the unit owner
An Association should survey and identify owned property which is to be covered by the association master insurance package.
A deductible will apply to the property insured in the association’s policy. The deductible could be on an occurrence basis, or could apply separately to each building or unit. There may be different deductibles for the different covered property.
One aspect of the deductible to consider is how the deductible will be handled with the unit owner. Unless the association documents specify who is responsible, the association or the unit owner, then the association should adopt a policy which describes the circumstances under which a unit owner would be responsible for paying the deductible.
It is important that the association Board and its management company understand the scope of the association coverages. Homeowners should be advised on what is covered. Even where the association covers improvements, alterations, fixtures and appliances within units, it is advisable for the homeowner to continue to carry coverage on their own separate policy.
One potentially confusing issue in condominium associations is who insures what. In the past, most condominium association policies would cover whatever the association owned. Other association policies extended coverage into the units – for example, the sheetrock walls and ceiling, the plumbing, and the electrical within each individual unit. Association policies would often be written broad enough to cover the floor, kitchen cabinets, appliances, and carpeting.
In recent years, with the rising cost of insurance claims and the ambiguous language in some association CC&R’s, insurance coverage has changed dramatically. Many condominium documents specifically detail what is to be covered – – for example: roof repair and replacement only. In this instance, the documents are explicitly pointing out that all other structure is not covered.
A Master Package Policy will generally include property coverage that can be categorized by:
Bare walls – coverage for the common elements, usually excludes property within the unit such as interior walls, permanently installed appliances, fixtures, finishings, floors and ceilings
Single entity – coverage for the common elements, usually includes initially installed property in accordance with the association’s original plans and specifications
All in – coverage for the common elements, plus initially installed property, plus improvements and betterments made at the expense of the unit owner
An Association should survey and identify owned property which is to be covered by the association master insurance package.
A deductible will apply to the property insured in the association’s policy. The deductible could be on an occurrence basis, or could apply separately to each building or unit. There may be different deductibles for the different covered property.
One aspect of the deductible to consider is how the deductible will be handled with the unit owner. Unless the association documents specify who is responsible, the association or the unit owner, then the association should adopt a policy which describes the circumstances under which a unit owner would be responsible for paying the deductible.
It is important that the association Board and its management company understand the scope of the association coverages. Homeowners should be advised on what is covered. Even where the association covers improvements, alterations, fixtures and appliances within units, it is advisable for the homeowner to continue to carry coverage on their own separate policy.